It is the oil price crash of 2014, and the Norwegian government is fearing a recession. What policies can be enacted to avoid a recession?
In this scenario, it would be suitable to use some Keynes. There are two parts to this. The first part is lowering taxes and increasing government spending. The second part is decreasing interest rate. By having more money flowing in the economy, there should be an increase in demand (points to graph).
JR
Related Economics A Level answers
All answers ▸How does increasing interest rates affect inflation?
What is the difference between perfect competition and imperfect competition?
Evaluate policies that could be implemented to reduce the market failures arising from polluting industries.
An economy has 3 leakages from the circular flow. The marginal propensity to save = 0.17, the marginal propensity to import = 0.23 and the marginal tax rate = 0.4. The government rises spending by £300 million, what is the final change in national income?